Winter Parliamentary session to set the direction for market: Avinnash Gorakssakar, Moneyinvestments.in

In an interview with ET Now, Avinnash Gorakssakar, Founder Director, Moneyinvestments.in, shares his views on the market and expectations from the upcoming winter session of Parliament. Excerpts:

ET Now: As far as direction of the equity markets is concerned, where do you expect it to end this year?

Avinnash Gorakssakar: I believe the market bias continues to be positive. May be in the intermediate short term, you could see bouts of selling, but around 5850 to 5900 is something which is reasonably possible. If some more bold reforms are implemented in the coming winter session of Parliament, you could see the markets rising significantly. This is going to be a big question mark because in the previous Parliamentary session, nothing much was achieved.

So when the winter session this time starts on November 22nd and if reforms on pension and insurance get cleared, the markets would get rerated and then even a level of 6000 looks possible. But in case these do not happen, then you could possibly see a downward bias. The comfort level for me would be around 5450-5500. The key decider for this trend would be what happens in the coming Parliamentary session because a lot of noise has been made on the reforms by the government. FII flows continue to be good. The interest-rate sensitives should possibly start moving up in the coming months.

ET Now: Looking at the situation realistically, I do not think anyone expects much business to be conducted in the winter session of Parliament. So based on that, doesn't even 5800 look a little difficult?

Avinnash Gorakssakar: In the short term, it does look difficult. The RBI Governor also said that inflation continues to be a big problematic area for macro economy and till December, any rate cut, at least on the repo side, looks extremely difficult. Unless inflation goes off, the markets are not going to be really on a great wicket. If anything does happen in the winter session, then the markets could move up. Otherwise, 5450 to 5500 looks to be a very distinct possibility. On the incremental upside, in the next few weeks, the markets would remain in a very close range.

ET Now: What do you make of the PSU banking stocks and whether or not you believe that some of them would emerge as good buys? Do you think that the NPA worries will remain a major overhang?

Avinnash Gorakssakar: For the short term, most of the PSU banks, especially the smaller ones, are going to take the brunt of what has happened in yesterday's RBI policy, especially increasing the provisioning for restructured assets. That was something which the market was not expecting and was a big disappointment. For FY13, possibly you could see for the smaller banks, about 5 - 6% of their PBT levels getting shaved off because of this order. For the large PSU banks, especially Bank of Baroda, Allahabad Bank or SBI, asset quality concerns have surfaced again. May be for another couple of months, this could continue and to that extent, the private sector banks would definitely find themselves in a better position. I would avoid the smaller PSU banks because their NPA concerns would be significantly more.

ET Now: Which stocks look attractive to you and why would you buy them?

Avinnash Gorakssakar: In this environment, I like stocks such as JK Lakshmi Cement as numbers for Q2 have been extremely robust. The cement market, both in north and western India where JK Lakshmi operates, has been extremely buoyant. Looking at the kind of expansion plans and the kind of valuation the company trades, which is roughly about six times FY14 and EV by EBITDA of roughly about $70 a tonne, clearly incremental upside remains. I would say a fair value of 150 looks possible in the next, say, 6 to 12 months. So this is a good midcap pick in this kind of volatile market.